IRS Threatens to Shut Down Medical Cannabis

By
Seattle PI
on February 23, 2012

The IRS threatens to turn back the clock on medical cannabis. A national alliance of industry leaders, patients and elected officials are fighting back with a new project aimed at education and policy change. The 280E Reform effort plans to bring an end to the current IRS campaign to close medical cannabis dispensaries.

The IRS campaign of aggressive audits was launched approximately 2 years ago and uses section 280E of the IRS code to deny dispensaries the ability to deduct legitimate business expenses. Denied expenses include items such as rent, payroll, and all other necessary business expenses.

These denials result in astronomical back tax bills for the affected dispensaries that, if not changed, threaten to destroy the financial viability of every medical cannabis dispensary in the country—thereby ending safe and affordable access to cannabis for legally qualified patients.

Section 280E was passed by Congress in 1982, long before the passage of medical cannabis laws and was intended to apply to traffickers of dangerous drugs. Last year, Congressman Pete Stark (D-CA) introduced the Small Business Tax Equity Act (H.R. 1985), which would create an exception to 280E for legal medical marijuana businesses, allowing them to take the full range of business expense deductions on their federal tax returns.

With fear looming that these audits will eventually shut down all legally operating medical cannabis businesses that have been operating according to their state laws—and some paying taxes for years—time is of the essence.

Campaign spokesperson Steve DeAngelo outlined the consequences: “Should the IRS campaign be successful, it will throw millions of patients back in to the hands of street dealers, eliminate tens of thousands of well-paying jobs, destroy hundreds of millions of dollars of tax revenue, enrich the criminal underground, and endanger the safety of communities in the 17 medical cannabis states.”

In response to these dangers, the 280E Reform project is announcing a nationwide campaign to bring awareness to legislators, provide legal and tax counsel for threatened organizations and prepare a grassroots educational effort to enlighten the public on the need to reform 280E.

“We are going to challenge this tax code to make sure that patients all over America have the ability to safely fill their health care needs with safe access from medical cannabis providers who are operating clearly with state laws,” said lead tax attorney Henry Wykowski. “This is a public safety issue and a healthcare right.”

An impressive team has been assembled to lead this effort, including Don Duncan, co-founder of American for Safe Access (ASA) and medical cannabis supporter who has been featured on 60 minutes, Dan Rather Reports and the LA Times; Henry Wykowski, legal tax counsel who successfully defended CHAMP in a similar IRS audit; Troy Dayton, co-founder of Students for Sensible Drug Policy (SSDP), former Senior Development Officer of the Marijuana Policy Project (MPP) and current CEO of ArcView Group; Amir Daliri, entrepreneur and co-founder of California Cannabis Association and President of CannLobby, LLC, a medical cannabis focused political consultancy; and Steve DeAngelo, Executive Director of Harborside Health Center and activist, whose accomplishments include the passage of Proposition 59, the Washington D.C. medical cannabis initiative.

Workshops announced: The IRS is Coming! Are you Ready? IRS Tax Audit Seminars to aid medical cannabis businesses ‘How to Get Ready?’ will take place on February 25th from 1 to 6 pm at the Main Ballroom of Just Dance, which is located at 2500 Embarcadero in Oakland.

The same workshop will also be held on March 10th from 1 to 6 pm at the Courtyard Marriott, located at 925 Westlake Ave. N in Seattle. Enroll online: http://www.280Ereform.org or (206) 466-1766.

About 280E Reform

The 280E Reform campaign is professionally managed and is committed to open communication and transparency. A national conference line is set up every Friday and is broadly published. This time is used to share with any interested parties the progress of this group. The call is every Friday at 12 pm PST, and can be accessed by dialing 209.647.1000; PW: 154639.

For more information, contact Gaynell Rogers at 415.298.1114 or gaynellrogers(at)gmail(dot)com.